WATERFORD INSTITUTE OF TECHNOLOGY

Consumer Behavior

Theme:

Is segmentation effective? That is, does one or more

market groups appear to be identifiable and

measurable, accessible, substantial, and responsive?

Student:

Barbara Krolikowski

Date:

2000/11/28

Content

I. Introduction:

Definition of segmentation 3

II. Conditions for effective marketing segmentation 3

1.Segmenting consumer markets 3

1.1. Geographic Segmentation 3

1.2. Demographic Segmentation 3

1.3. Behavioral Segmentation 4

1.4. Psychographic Segmentation 4

2.The necessarily criterions for effectiveness 4

2.1 Measurable and identifiable 4

2.2. Accessible 5

2.3. Substantial 5

2.4. Responsive 6

III.

Conclusion: The opportunities of segmentation 7

IV. References 8

2

I.

Introduction: Definition of segmentation

If you have a market for a product with one or more consumers you have the possibility to

segment this market, because the consumers wanted different types of a product. If you ask

twenty people why they want for example a special kind of a car you probably would receive

twenty different answers. Some see a car as a status symbol or others wanted to have a

comfortable car and for a few people the price is the most important factor. Such a market

called

`heterogeneous market′

. For this kind of market companies make market segmentation.

But what is market segmentation? Market segmentation is the process of splitting customers

in different groups, segments consisting of people who have relatively similar product needs.

The purpose is to design a marketing mix that more precisely matches the needs of

individuals in a selected segment.1

II. Conditions for effective marketing segmentation

1.Segmenting consumer markets2

To make segmentation effective you have to divide the market in different segments. The

major bases for segmenting consumer markets can be grouped into four categories.

demographic, geographic, psychographic and behavior segmentation. As next I want to give

you a short explain about these types of segmentation.

1.1. Geographic Segmentation

The first one is the geographic segmentation. This is one of the earliest and still most

commonly used methods of segmentation. It involves dividing markets into different

geographic variables, such as regions, city size, population density and climate.

1.2. Demographic Segmentation

The second major method of segmentation is also one of the most frequently used method of

segmenting markets. Demographics variables are for example age, sex, income, education,

occupation, religion, race, nationality, family size and stage reached in the family life cycle.

1 Mc Donald, M./ Dunbar, I. (1995), Market Segmentation, Britain: The Bath Press, page 10

2 Wilson, R./ Gilligan, C. (1997-second Edition), Strategic Marketing Management, page 280-291

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